Grant Williams

Math and TTMYGH

I read Grant Williams religiously (and I don’t do much religiously).

I was pleased to see Grant’s stab at perspective. I’m paraphrasing, but my recent rant on JPMorgan’s legal fees (here, here) gave me the urge to give Mr. Williams a high-five. Here is a good example:

  • In 1995, $1.3 billion was enough to bring down Barings Bank.
  • In 1998, Long Term Capital Management required a $3.6 billion bailout from 14 financial institutions after losing $4.6 billion in less than four months.
  • In March of 2008, Bear Stearns received a 28-day, $25 billion loan from the Federal Reserve in order to avert its collapse
  • Six months later, on September 15th… Secretary Hank Paulson (or, as they were known back in those days, “Los Pollos Hermanos”), crafted a $787 billion bailout package.

Now, a mere five years on, we find ourselves in the position of requiring roughly three Bear Stearns bailouts every month just to keep things humming. Put another way, we require 23.6 LTCM bailouts or 65.38 Baring Brothers bailouts every month, just to keep the global financial system from being brought to its knees.

Phenomenal. He also places perspective on The Taper, and goes on to put some on inflation. His newsletter is always worth a read (here).

My guess is that when the debt ceiling fiasco, government shutdown, and general news bluster fades into election posturing, a little perspective will be worth talking about again. But who knows how many dramas are left in the magician’s hat. Obama talks about bringing immigration back onto the front pages. I’m not sure that’ll be enough of a distraction from the bubble being inflated before our eyes.